What is meant by "net operating income" in real estate?

Net operating income (NOI) is a crucial financial metric in real estate that represents the income generated from a property after deducting the operating expenses associated with managing and maintaining that property. This figure does not include costs related to financing, taxes, or depreciation, as it focuses solely on the operational aspects of the property.

Understanding NOI is essential for property managers and investors because it provides a clear view of the property's profitability before accounting for financial obligations. It reflects the revenue generated from the property through rental income minus expenses such as maintenance, property management fees, utilities, and property insurance. This metric helps in evaluating the performance of real estate investments and is commonly used by investors to compare different properties.

The other options do not accurately capture the definition of net operating income. The total income received from rental properties might imply the gross income without expenses included, while the projected income from future leases refers to potential income rather than the revenues currently generated. Excluding taxes and depreciation might suggest a gross profit figure, but it does not consider necessary operating expenses, which are crucial to determining true operating income.